Liveris: Dow expects slow growth repeat in 2013

The Dow Chemical Co.’s leadership team is sticking to its priorities as it implements job cuts and adjusts the company’s businesses to fit a new economic reality.

The company expects the current slow growth economic conditions to continue.

“A repeat of 2012 is, in fact, what were are planning for,” Dow Chairman and CEO Andrew Liveris told chemical industry analysts participating in a conference call on Thursday after the company released its earnings report for the fourth quarter.

The company reported a $716 million loss in the fourth quarter, but had a profit of $389 million when excluding certain items such as charges for restructuring. For the full year, Dow reported earnings of $842 million, or $2.25 billion on an adjusted basis.

Liveris expects Europe’s economy to remain challenged through 2013 but there are some improvements in U.S. markets.

The company is intervening with cost saving measures and targeted investments as if the market isn’t going to recover this year, Liveris said. He said if the economy speeds toward recovery, the company’s earnings will more quickly benefit.

The company’s Sadara joint venture and Gulf Coast investments are game changers for Dow’s bottom line, Liveris said. He said Dow also will benefit from feedstock positions in North America and from its Agricultural Sciences unit, which saw sales up 17 percent in the quarter.

Livers also said the company will benefit from its reward in the K-Dow Petrochemicals arbitration. Dow expects to receive about $2.5 billion because Kuwait-based Petrochemical Industries Company backed out of the companies’ planned joint venture. The reward will go toward Dow’s priorities for cash, which remain paying down debt, rewarding shareholders and investing in growth within the company.

“As we enter 2013, I’m confident we have the right catalysts in place to deliver on our earnings growth targets,” Liveris said.

Plans for the year include aggressively reducing costs, increasing cash, prioritizing growth investments, having strong portfolio management, delivering on financial targets and continuing to reward shareholders.

Bill Weideman, Dow’s chief financial officer and executive vice present, said people can expect further action to improve cash flow.

“We feel very confident we’re going to generate strong cash flow in 2013, and that will give us the ability to continue to pay down debt, fund pension and also reward shareholders,” Weideman said.

Liveris said the company will continue to invest in projects that deliver value in the short term.

“In this current slow growth world, we recognized that we must adopt a more near-term, pragmatic approach to funding projects that preserve growth and simultaneously improve the return on capital, all the while reducing risk,” Liveris said.